Supply chain disruptions happen, and optimizing your supply chain management systems and processes to deal with them requires rigorous analysis. The ideal way to deal with unexpected disruptions is by utilizing supply chain analysis methodologies.

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Supply chain analysis evaluates processes while delivering products to customers. Each process undergoes step-by-step evaluation, i.e., purchasing raw materials from suppliers and delivering the final product to the customer. It analyzes the estimated time to deliver products without compromising quality.

Supply chain analysis works great with logistics management to identify suppliers you can bypass, improve forecasts, reduce inventory and more.

What This Article Covers:

• Supply Chain Analysis
  • The Process
  • Tools
• Key Benefits
• Possible Issues
  • Financial
  • Physical
• Best Practices
• Conclusion

Supply Chain Analysis

Supply chain analysis, or supply chain optimization, maps production processes to assess product flows (physical and monetary) and evaluate the overall usage of time and resources. In return, this assessment allows supply chain managers to understand their current processes and make smarter decisions.

It also enables companies to create value-added processes while removing supply chain redundancies.

Businesses can predict strategic opportunities using information obtained from sustainability reporting and performance metrics. The supply chain analysis model assesses policies and economic activities to spot inflation, unemployment, market disruptions and so on.

The Process

So, what’s the best way to conduct a supply chain analysis? Let’s look at how using the following steps:

1. Supply Chain Mapping: Provides a supply chain overview, including chain actor position, product flows and the interaction between suppliers and customers.
2. Develop Economic Accounts of Supply Chain Agents: Quantifies agent activities and their contribution to the materials flow, both physically and monetarily. With this information, the analyst can determine weak areas and find solutions to issues.

Tools

Supply chain analysis provides visibility into transportation, logistics, product price availability, demand and more. But what tools are required?

1. Predictive Analytics: Fine-tune supply chains by forecasting future events. It uses past data to make predictions.
2. Prescriptive Analytics: Leverage AI and machine learning to understand historical data and recommend the next course of action. For instance, it can answer questions like “how can we make it happen?” or how to create the next supply chain model. It provides ideas to deal with unexpected events.
3. Descriptive Analytics: Display the organization’s current and past performance on dashboards as graphs or charts to answer complex questions. It uses statistical modeling and business intelligence (BI) on existing data sources for analysis.
4. Hybrid Performance Measurement: Evaluate supply chain performance using a hybrid model, i.e., data envelopment analysis (DEA). This model uses neural networks and decision trees approach to evaluate performance.
5. Performance Metrics: Focus on improving quality using metrics like the cost of goods sold, cash to cash cycle time, timely shipping rate, order measurement, perfect order rate, sales forecast and more. This information will help determine which metrics are most relevant.

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Primary Benefits

Now that we know which tools and methodologies to follow, we will discuss the advantages of supply chain analysis.

Boost Value

Improve productivity in the long run by evaluating software functions. Compare two different programs and select one with relevant features and functions. Choosing an expensive module that provides the desired functionality might be a favorable option over cheaper programs.

Though this option is a bit pricey, it can help save huge amounts of money in the long term.

Eliminate Weak Links

Create diagrams by linking components throughout the production journey to detect weak points. For example, your component would be shipping costs if you’re running a shipping company. Analyzing specific aspects can help optimize costs.

Supply chain analysis lets you see a series of links and if they bleed resources.

Strengthen Planning

Minimize negative impacts with backup plans during unexpected events or natural disasters. Strategic planning and supply chain analysis can help avert disasters.

Improve Forecasting

Minimize volatility and make accurate spending forecasts using historical data. Make predictions by analyzing costs that are likely to rise, become stable or fall during peak or holiday seasons.

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Possible Issues

With supply chain analysis, organizations can identify issues within ongoing operations. Most often, these problems are related to timing, performance and efficiency. Here are some major supply chain issues businesses face:

Financial

This issue is related to monetary transactions between suppliers who often deal with goods supply or services. The most common issues they face are:

• Logistics costs
• Incorrect deliveries
• Lost sales due to incorrect delivery or delayed shipment
• Overhead costs

Financial supply chain problems impact the financial performance of the business. However, with supply chain analysis, companies can identify areas to improve by:

• Collaborating with suppliers to reduce overhead costs.
• Identifying ways to reduce shipping and transportation costs.
• Addressing funding gaps using finance options.

Physical

The physical supply chain often refers to people and the activities they carry out within the supply chain and their system. These operations are likely to create the following issues:

• Abrupt demand change
• Delayed shipping
• Stock quality and quantity
• Incorrect items
• Stock custom clearance

While supply chain issues directly impact customer experiences, supply chain analysis helps fulfill customer expectations. It can answer questions such as:

• Will delivery take place as expected?
• Are your products and services available 24/7?
• How quickly can you solve customer queries?

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Best Practices

Once you’ve identified supply chain issues, your next move is to explore and find the best solution to improve overall processes. Here are some best practices to follow.

Strengthen Shortcomings

You should start looking for alternate arrangements if you detect weak links within your supply chain or suppliers. You must evaluate the business based on social, political and environmental conditions. This evaluation helps create an ideal alternative or a great backup plan.

Adopt the Latest Tools

Ensure you’re using the latest tools and software for inventory management. Inaccurate data, lack of visibility and delays happen if you’re using outdated tools. Some market-leading solutions include names like Fishbowl, NetSuite, Zoho Inventory and more.

Improve Cash Flow

Strong cash flow signifies a resilient and powerful business entity. This key marker indicates that your business can provide access to funds whenever required. Such organizations tend to have flexible finance options to move their business forward.

Manage Customer Expectations

Close gaps between customer expectations and services delivered by providing efficient and effective customer service. Keep customers updated with the latest information about service delivery times, items in stock, product availability and ranges.

Negotiate Early Payment Discounts

Reduce costs by negotiating with the right suppliers. This tactic strengthens relationships between suppliers, customers and the entire supply chain.

Engage a Logistics Expert

Companies can always engage an expert if the situation gets out of hand. For example, if a business undergoes a dynamic change, it’s possible to find complexities during the operation. A logistics expert can help solve delayed shipping, transportation, delivery times and more.

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Conclusion

Supply chain analysis is key to holding a competitive advantage and is a significant part of your supply chain. You can use these insights to identify issues and create new opportunities to increase profits and enhance the customer experience.

How effective is supply chain analysis for your business? Let us know in the comments!